![]() | Current Issues | No.51 September 2007 |
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No two ways about it: the soccer World Cup competition in June 2006
in Germany was a great experience, not only for the soccer fans, bit
its impact still resonates far and wide. From an economic point of view,
various commentaries have all concluded that the effects were positive.
Those commentaries were in line with a series of analyses published
prior to the event, according to which the investments of around €6
billion in connection with the competition, in conjunction with the
expected expenditure of 1–2 million foreign visitors, would markedly
affect income and employment in Germany.
Our study (Hagn and Maennig 2007a) is the first work that examines
the effects of World Cup 2006 in Germany on an ex post econometrical
basis. It is the first multivariate study to examine the employment
effects of a major sporting event outside the USA. This is particularly
interesting set against the backdrop of contrasting modes of functioning
between labour markets in the USA and Europe. In addition, the study
also tests for method sensitivity by running the dataset in parallel
with the three methods usually applied in studies on US sport events.
A fourth method is applied, which attempts to overcome potential shortcomings
associated with the other three by using an extended “Difference-in-Difference”
estimate to compare the development unemployment numbers in the 12 World
Cup venues with the development of the unemployment numbers in 63 other
German cities.
The results of our study demonstrated that the 2006 World Cup did not
influence unemployment in the 12 match venues to an extent that was
significantly different from its pattern in non-venues. These results
correspond with almost all ex post multivariate income and employment
analyses of major sporting events and venues which show no short term
income and/or employment effects that are significantly positive (Baade
and Matheson 2004 for the soccer World Cup 1994 in the USA; Szymanski
2002 for the twenty largest economies in over the past thirty years,
many of which have hosted the Olympic Games or the soccer World Cup
at least once during that period). The results are also in line with
a study by Maennig (2007) using descriptive statistics that comes to
the conclusion that the effects of the World Cup 2006 in retail business,
tourism and employment were not sufficient to have any overall economic
significance. Concerning potential long-term effects, Hagn and Maennig
(2007b) analyse the employment effects of the soccer World Cup 1974
in Germany. They conclude that that the World Cup was not able to generate
any short to long-term employment effects.
We nevertheless hesitate to share the concern expressed both implicitly
and explicitly in many of the comparable sports economic studies that
the positive effects of sporting events claimed by many protagonists
are not true and that (bids to host) major sporting events are inefficient
from an economic point of view. There are three reasons for this:
Firstly, other effects such as the feel-good benefit to the population
and/or difficult to quantify image effects may be sufficiently important
to justify major sporting events and/or subsidies for them from public
funds. In both of the above-mentioned fields of possible effects, sporting
economic empiricism is still in its infancy.
Secondly, the treatment group in the selected form of municipality
areas might be too large and too highly aggregated to statistically
prove significant effects. Studies on the effects of major sports venues
on property values in surrounding areas indicate a maximum affect area
of around 3,000 metres (Ahlfeldt and Maennig 2007).
Thirdly, the employment effects claimed by the sports protagonists,
which are usually based on corresponding ex-ante impact studies, cannot
strictly speaking be rejected by testing for significant differences
from zero. Their rejection would be possible if the postulated values
were tested directly. However, this would not be regularly successful
in the relevant studies because the effects claimed are so close to
zero. References
Ahlfeldt, G. & Maennig, W. (2007) Impact of Sports Arenas on Land
Values: Evidence from Berlin, Hamburg Working Paper Series in Economic
Policy, Nr. 03/2007.
Baade, R.A. & Matheson, V.A. (2004) The quest for the cup: Assessing
the economic impact of the World Cup, Regional Studies, 38, 343-354.
Hagn, F. & W. Maennig (2007a), Labour market effects of the Football
World Cup 2006 in Germany, forthcoming in: Applied Economics.
Hagn, F. & W. Maennig (2007b), Employment effects of the Football
World Cup 1974 in Germany, forthcoming in Labour Economics.
Maennig, W. (2007) One year later: A re-appraisal of the economics of
the 2006 soccer World Cup, Hamburg Working Paper Series in Economic
Policy, Nr. 10/2007.
Szymanski, S. (2002) The economic Impact of the World Cup, World Economics,
3(1), 169-177. Contact
Prof. Dr. Wolfgang Maennig
Hamburg University Hamburg, Germany Email: w.maennig@arcor.de www.uni-hamburg.de/economicpolicy ![]() http://www.icsspe.org/portal/index.php?w=1&z=5 |